My mother is at a ripe old age, and already a great grandmother. Older folks derive an immense sense of pride and joy in seeing the expansion of their family bloodline - children, grandchildren, and great grandchildren even.
For years since I started work, I've been making it a point to contribute 10% of my income to her. She hadn't found much of a need to spend. So she had been systematically saving the money into a bank savings account.
Recently, she showed me her passbook. Yes, she's still using a passbook! More than 20 years on, the savings had snowballed to well over $200,000. That's quite a tidy sum indeed.
She has some interesting intentions over how this would be used.
Firstly, should she run into any medical problem, this sum would be used to pay for medical contingencies. To ensure that someone else would have access to it, the savings account book was hence set up as a Joint Savings "or" account with me.
Secondly, if she passes on, her intention is that I should inherit the sum. As far as she is concerned, the money was from me and it's only fair that it should end up with me eventually (if any is left).
Personally, my thoughts were that the money I gave her was for her to use and to spend as she saw fit. I have no expectations for any sort of inheritance.
My mother is a most frugal person and remains very much a saver rather than a spender. In part, her sense of cost is very much anchored to her childhood. Hence, she really has difficulty contemplating paying for expensive meals, or even the taxi fare.
Several points I get from this:
- Frugality and savings can generate a tidy sum by retirement.
- Set aside a sum for medical emergencies; this risk increases with age.
- Have someone you trust to have access to the cash; not going to help you if you're in serious trouble and someone can't get access to it for you.
The only downside is that keeping the sum in a savings account hasn't exactly been ideal with the negligible interest rates that we've been experiencing. But it's not unreasonable either given that this hoard has to be kept fluid, and in low-risk form.
Seems like a reasonable plan? I thought it was quite prudent.
The side note that I had was over when my mother should have communicated this intention? It's fortunate that she is still in fairly good mental and physical health despite her age. Although, I can observe in recent years that she can get pretty confused. I think it is best to establish such an arrangement much earlier.
Fruits for thoughts.
Meanwhile, HELLO 2015!